Income Tax
Employment Income/Self Employed Income/Income from Property Rentals/Other untaxed income.
- The personal allowance is £12,500
- Income tax on earnings between £12,500 to £37,500 is 20%
- Income tax on earnings between £37,501 – £150,000 is 40%
- Income tax on earnings between £150,001 and above is 45%
Savings Income Tax
- ISA’s are tax free
- There is a £5,000 zero rate of tax for savings if your other earnings are £12,500 or less. This is your starting rate for savings.
- You will still be eligible for the 0% starting rate if your other earnings are less that £17,500 but it will be reduced.
- You may also get up to £1,000 of interest tax-free depending on which Income Tax band you’re in. This is your Personal Savings Allowance.
Dividend Tax
- The first £2,000 is tax free
- Dividend tax on earnings between £12,500 to £37,500 is 7.5%
- Dividend tax on earnings between £37,501 – £150,000 is 32.5%
- Income tax on earnings between £150,001 and above is 38.1%
National Insurance – Employees
In most cases…
- The first £9,500 is free from National Insurance
- National Insurance on earnings from £9,501 – £50,000 is 12%
- National Insurance on earnings from £50,001 is 2%
National Insurance – Employers
In most cases..
- The first £8,788 is free from National Insurance
- National Insurance on earnings from £8,789 is 13.8%
National Insurance – Self Employed
In most cases…
- The first £9,500 is free from National Insurance
- Class 4 National Insurance on earnings from £9,501 – £50,000 is 9%
- Class 2 National Insurance is £158.60 per year.
There are many other thresholds for other circumstances not mentioned here. You can read more about them on the HMRC website:
https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past#tax-rates-and-bands
It’s always best to check with your accountant to make sure that you are paying the right amount of tax. Of course you also want to make sure that you are claiming back the most you can. At The Fishbourne Accountant we pride ourselves in saving people in tax. Contact us today!
Last Updated 07/08/2020